Kazakhstan has been successfully building its market economy since gaining independence in 1991. The constitution has established private property rights, and the development of small enterprises was officially announced as a priority for economic policy. Twenty-eight years later, we can now see that the bet on development of the private sector has paid off, though the potential for further development of small enterprises remains significant.
Its rich mineral resource base allowed Kazakhstan to develop oil and gas and mining sectors. This was accomplished through large-scale privatization of the big industrial enterprises and attracting foreign investments. Kazakhstan is an oil economy: it possesses more than 3% of world reserves of oil. The country increased the production of crude oil and gas condensate from 1 million barrels per day in 1993 to 1.7 million barrels per day in 2016, with oil exports reaching 70 million tons (USEIA 2017).
Oil production is concentrated around the three largest projects: Karachaganak, Kashagan, and Tengiz. Kazakhstan’s two largest projects, Tengiz and Karachaganak, accounted for 50% (Tengiz 35%, Karachaganak 15%) of the country’s production in 2016 (Energy Intelligence Group 2017). High concentration can also be seen in other mineral resource extraction sectors—mining, coal production, agriculture (grain and wheat production)—as well as in the transport, construction, and banking sectors. Large private industrial and financial conglomerates are in fact a legacy of Soviet central planning and therefore have closer ties with other conglomerates in the former Soviet Union countries than with local companies in Kazakhstan. In addition, this small number of large companies mostly procures sophisticated goods and services that are not produced in Kazakhstan.